Essays on Market Power in the Alberta Wholesale Electricity Market

• Author / Creator

  Lin, James

• This thesis examines market power in a deregulated electricity market, and comprises two distinct areas of research grouped into three chapters. The thesis begins by overviewing electricity markets, including descriptions of uniformprice and discriminatory-price electricity auctions (and the resulting market power incentives), as well as carbon capture & storage (CCS). The first model is a treatment of the economic withholding potential arising from CCS in a uniform-price electricity auction. A firm that engages in CCS to reduce polluting emissions, thus reducing its carbon tax payment, must devote a fraction of electrical capacity to that effect, removing it from the market. This form of withholding can raise the market price of electricity, providing additional incentive to engage in CCS. With this price effect the carbon tax level at which the firm is indifferent between doing CCS or not is lower compared to without, and the firm may turn on CCS even if the carbon tax does not exceed the cost of doing so. We also analyze CCS in a discriminatory auction, which presents different withholding incentives than the uniform auction, and contributes to the discussion on which format is more desirable. The second area of research investigates allegations of market power abuse in the Alberta electricity market, whereby firms supposedly use public information to raise market prices higher than would otherwise obtain. It studies how this information allows firms to identify themselves through their price offers to their rivals, and asks whether this knowledge affects pricing decisions.

• Subjects / Keywords

  • Alberta
  • Market power
  • Market Surveillance Administrator
  • Electricity
  • Carbon capture

• Graduation date

  Fall 2016

• Type of Item

  Thesis

• Degree

  Doctor of Philosophy

• DOI

  https://doi.org/10.7939/R38K7548K

• License

  This thesis is made available by the University of Alberta Libraries with permission of the copyright owner solely for non-commercial purposes. This thesis, or any portion thereof, may not otherwise be copied or reproduced without the written consent of the copyright owner, except to the extent permitted by Canadian copyright law.